Cedric Charpentier has about 20 years’ experience with French insurance major Axa, and was appointed chief executive of its Gulf division, based in Dubai, at the end of last year. Axa has been involved in the Gulf for more than 60 years, but only more recently has the concept of broad-based insurance services become more marketable in the region. He gives insight into the workings of an industry that has been comparatively slow to catch on in the Arab world, but which is making up ground quickly.
The region has traditionally been under-insured. Is this reversing?
Yes, I believe that trend is reversing. Insurance penetration has been historically relatively low in the region, but it is accelerating significantly. In the non-life sector, the premium per capita is approximately 50 per cent of the level of mature markets, while on the life side, it is close to only 10 per cent. But the gap is closing rapidly.
The acceleration is because of the accumulation of many factors, such as the growing awareness of insurance benefits among the population, starting from business owners wanting to protect their assets to individuals focused on insuring and protecting their families.
There are also the efforts from insurance companies to make their products more customer- centric and more accessible through multiple distribution channels, including digital.
But more importantly there has been a drive by regulators, who have been very proactive recently to promote and implement proper coverage of their population. As a recent example, the implementation of mandatory healthcare insurance contributed to this increase in Dubai.
What are the factors that will determine growth?
The first component is the expected organic growth of the local economy, fuelled by solid fundamentals such as expanding population and investments. Expo 2020 is in that respect a prime example of the latter. Coupled with this, the regulators’ approach to driving insurance has and will continue to have a major impact through the implementation of mandatory insurance.
Simultaneously, the regulators have partnered with insurance companies to educate the consumer about risks and protection. We at Axa pride ourselves in providing solutions that better protect and care for individuals. Our fundamental purpose is critical to people’s lives.
However, the challenge facing the insurance market is to create sustainable long-term growth, which will only be achieved through a number of key success factors, such as innovation in products and services, digitalisation for increased accessibility and superior customer experience.
This requires a deep transformation of the insurance industry as the customer must firmly be placed at the centre of all that we do. A new era has dawned for the insurance industry and we have to embrace these changes. Those insurance companies that fail to rise to the occasion will most certainly struggle and run the risk of disappearing altogether.
How does the low oil price affect the insurance business?
Some customers are clearly being affected and remain prudent in terms of managing their expenses. In this context, our customers expect innovative solutions to improve the efficiency of their insurance programmes. As an example, Axa has introduced services such as teleconsultation and well-being to our healthcare corporate customers. This has brought about a significant difference in the way we interact with our corporate partners. Our strategy is to move away from being purely a claim payer to a healthcare partner encompassing prevention and well-being.
What sectors are best for growth? Life? Health? Property? Motor? Marine?
Because of the mandatory insurance requirements throughout the region as well as increased awareness and education, health has been the fastest-growing segment over the past decade. We expect further exponential growth in the years to come. UAE Vision 2021 was launched by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, which outlined healthcare as one of six national priorities.
Life insurance is rapidly gaining momentum in the region and there is huge potential for growth in savings and protection products. Axa aims to invest in this sector and bring to the market a key differentiated offer in the near future.
The SME sector is a critical contributor to the local economy and as such is a key focus area for growth. Business owners’ approach to risks – property, liability, marine – is still relatively limited, which creates an opportunity to educate and drive comprehensive insurance solutions. On top of this, new risks are emerging, which creates the need for innovative insurance products. Cyber risk is a perfect example, making us vulnerable in our personal and professional capacities through the ever increasing digital space we operate in.
How do recent problems in Dubai – fire risks in residential blocks, new safety regulations – affect business?
In recent years there have been a number of high-rise building fires and natural disasters. Because of the lack of risk awareness and cover, many people have been badly affected in their personal capacity and as business owners.
Following each of these unfortunate events, people tend to react by taking insurance cover, rather than being proactive before the event occurs. One of our core responsibilities as an ethical insurer is to educate the larger population on precautions that should be taken to better protect themselves and their families. At Axa, we actively market home insurance to better address these incidents, but awareness and penetration remain relatively low.
Others are pulling out. Why does Axa remain committed?
Axa has been present in this region for the past 65 years through a joint venture partnership with the Kanoo Group, a prominent and successful family business conglomerate. Our commitment to this region is evident by the presence of our 1,000-plus employees who currently serve more than one million customers. And we intend to continue investing and expanding, as we see growth potential in the Middle East. Our strategy is focused on building a long-term sustainable partnership with our customers and our shareholders.
What is your view of the regulatory climate for insurance in the region?
The regulators have made great strides in developing a regulatory climate, which is proactive, taking into account the need to protect the customer and the insurance industry at large. They have managed to accomplish in just a few years what other mature countries have taken decades to do. The result is a robust regulatory framework, encompassing customer needs, the requirements of insurance companies but also third parties such as healthcare providers.
Why isn’t Axa in the DIFC? Or the new financial market in Abu Dhabi?
Axa has a long-standing position of more 65 years as an onshore market player with a solid branch and distribution network across the GCC. We have access to the DIFC and ADGM markets via reinsurance brokers and companies. Our proximity allows regular contact and we are an active participant in this growing and important reinsurance hub for the GCC and beyond. It follows that we do not need to be physically present in such financial centres as of today.
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